Optical discrete multi-tone (DMT) transmission has emerged as a promising solution to realize a high-capacity optical network. However, several optical and hardware impairments may alter the transmission channel significantly, which include chromatic dispersion (CD), polarization mode dispersion (PMD), electro-optics hardware amplitude and phase response, optical modulator chirp and nonlinearity, and signal-signal beating noise if direct detection is employed. There are generally two types of detection schemes, namely direct detection and coherent detection. Depending on the detection scheme, these impairments would impact the channel and subcarrier signal to noise ratio (SNR) differently. Therefore, water-filling is used to maximize the performance of optical DMT transmission by optimizing the bit and power loading for DMT subcarriers. There are two types of loading algorithms, rate adaptive (RA) and margin adaptive (MA). RA tries to maximize the bit rate for a given bit error rate (BER) target, while MA tries to minimize BER for a given bit rate. Because it is difficult to implement a non-integer bit in practice, the loading algorithms must deal with the so-called finite information granularity, rendering the resulting bit and power loading sub-optimal. For example, SNR is required to increase by ˜3 dB to maintain the same BER for quadrature amplitude modulation (QAM) with one bit increment. So for subcarriers with SNRs within a 3 dB gap, the bit number needs to either round up or down to the closet integer, and the power profile needs to be adjusted accordingly. Some well-known loading algorithms such as Chow's and Levin-Camepllo algorithms can provide both RA and MA solutions, but they only deal with bit and power loading.